STUDY OF THE GOVERNANCE SYSTEM OF DAIRY COOPERATIVES

Submitted By

Raghvendra Singh (23085)

Faculty Guide: Prof. Arvind Gupta

HOST ORGANISATION: National Dairy Development Board, Anand

OTS (PRM 2002-04)

 Institute of Rural Management Anand

2003

TABLE OF CONTENTS

Sr. No. Headings Page No.

Acknowledgement v

Executive Summary vi

1. Context of study 1

2. Objective 1

3. Scope of study 2

4. Methodology 2

4.1 Questionnaire Survey 2

4.2 Semi-structured interviews 2

4.3 Observation method 3

4.4 Information from secondary sources 3

5. Literature-based conceptual understanding 3

5.1 Key democratic practices in cooperatives 5

5.2 Electing a good board 5

5.3 Idealized functions of the Board of Directors 6

5.4 Criteria for separating board and management decision areas 7

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 5.5 Evaluating board performance 10

5.5.1 Why Board evaluation? 10

5.5.2 Why the increased interest in Board evaluation? 10
5.5.3 How can the evaluation of the Board be done? 10
5.6 Indicators of good governance 11

5.7 Governance issues in Indian dairy cooperatives 12

6. Key findings from questionnaire survey 14

7. Key findings from interviews 15

7.1 Term of a Board 15

7.2 Electoral process improvements 16

7.3 Criteria for eligibility 17

7.4 Linking board tenure to its performance 18

7.5 Performance indicators for board evaluation 18

7.6 Incentives and powers required to accept accountability 19

7.6.1 Financial compensation like salary 20

7.7 Motives for becoming a member of Board of Directors 20

8. Key inferences from questionnaire and interviews 21

9. Suggestions for improvement 23

9.1 Issues under the purview of the state cooperative societies act 23

9.1.1 Duration of the term 24

9.1.2 Restriction on number of consecutive terms 24

9.2 Issues Related to Bylaws of Milk Union Ropar 24

9.2.1 Composition of the Board 24

9.2.2 Quorum 25
9.2.3 Relationship with the Milk Federation 25

9.3 Issue in the hands of Milk Union 26

9.3.1

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Awareness 26 9.3.2
Accountability and control 28
9.3.2.1 Evaluation of board performance 28
9.3.2.2 Evaluation of an individual director 31
9.3.3 Management of board meetings 31
10. Limitations 31

11. References 33

Annexure I: Board performance evaluation form 34

Annexure II: Key questions for interviews 37

LIST OF TABLES

Sr. No. Headings Page No.

1. Criteria for Separating Board/Management Responsibility Areas 9

2. Items of the Questionnaire that Generated Contrasting Responses 14

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 ACKNOWLEDGEMENT

I would heartily acknowledge my OTS coordinator Prof. Shailesh Gandhi for bestowing me the
opportunity to have a closer look at the working of an organisation and to appreciate the
intricacies of working in a typical organisational setting.

I would also like to thank my faculty guide Prof. A. Gupta for providing me his guidance and
enabling me to develop a conceptual understanding of my topic. His keen direction helped me to
look beyond the obvious and thus fathom the topic to a deeper extent.

I would also like to thank my Reporting officer Mr. Sriram Singh who provided me with his
invaluable suggestions at all stages of this segment. His personal attention was instrumental in
making this experience extremely insightful and enjoyable.

Finally I would like to thank all the other officials at NDDB Anand, NDDB state office in
Ludhiana, Officials at Ropar Milk Union and the Directors of Milk Union Ropar without whose
help and support this project would not have seen the light of the day.

Raghvendra Singh (23085)

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 EXECUTIVE SUMMARY

I Student’s Name: Raghvendra Singh

II Organization: National Dairy Development Board
III Reporting Officer: Mr. Sriram Singh, Sr. Executive
IV Faculty Guide: Prof. Arvind Gupta
V Project Title: Study of the Governance System of Dairy
Cooperatives

Objectives
A major objective behind undertaking the study was to understand the democratic practices and
systems in the governance of Dairy Cooperatives. Furthermore, a case study of the governance
system of Milk Union Ropar had to be conducted.

Scope
The case study was restricted to Milk Union Ropar. Some data was also collected from Milk
Union Gurdaspur

Methodology and sources of data

Primary data sources included semi-structured interviews carried out with the members of the
Board of Directors. A questionnaire survey of the Board of Directors was also carried out.
Observation of a Board Meeting at Milk Union Gurdaspur was another source of primary data.
Secondary data sources included documents like the Punjab Cooperative Societies Act 1961,
Byelaws of Milk Union Ropar, Model Cooperative Societies Bill 2000 etc.

Findings
From the data collected from interviews, certain inferences could be clearly drawn out. Either the
Directors genuinely lack awareness about their roles and powers or they fake ignorance about
them to shirk accountability. In the absence of any performance demand or performance

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evaluation, people with vested political interests can get elected and spend their tenure
comfortably without making any significant contribution to the Union.
The responses of the Directors to the questionnaire seemed tailored rather than their actual
opinions. This was reflected in the various contradictions and inconsistencies in their responses

Recommendations
A three-year term will be ideal for a Board. The number of ex-officio members and nominated
members should be reduced. The awareness of the Directors needs to be increased through a
comprehensive training package administered and evaluated by an independent agency. A
performance evaluation of both the Board as well as an individual Director will go a long way in
ensuring accountability and the demand for performance.

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